Table 1: Earnings Snapshot
|Net Income ($B)||0.001||0.006||500%|
|Source: BigBand Networks Inc. |
Net income and EPS for Q1 2009 are non-GAAP figures.
Table 2: Wall Street Comparison
|Analysts' Consensus Estimate 1Q09||Actual 1Q09|
|Source: BigBand Networks Inc. and Morgan Keegan & Company Inc.|
"We're now expecting revenue softness [in the second quarter] as a result of cautious carrier spending and lengthening sales cycles in the near term," BigBand president and CEO Amir Bassan-Eskenazi said on Tuesday afternoon's earnings call.
Repeating what Harmonic Inc. (Nasdaq: HLIT) execs expressed earlier this week, BigBand's main man said "visibility remains limited" for the balance of 2009 as service operators continue to scrutinize capital spending. (See Harmonic Q1 Sales Dip .)
That said, BigBand expects second-quarter earnings per share of 2 cents to 4 cents, lower than Wall Street's expectation of 6 cents. The vendor also forecast second-quarter revenues in the range of $40 million to $42 million, more than $6 million off the $48.3 million Wall Street was expecting.
Investors responded by sending BigBand shares down 18 percent, to $5.59 each, in early trading Wednesday.
Although vendors are having trouble predicting capex trends for this year, Morgan Keegan & Company Inc. analyst Simon Leopold disclosed in a research note that he expects MSOs to chop capital budgets by about 6 percent in 2009.
Vetting global opportunities
Although the bulk of its revenues (82 percent) comes way of U.S.-based customers, BigBand is looking to cultivate and build more international businesses. "Going forward, we expect the international market to be a key area of growth and diversification," Bassan-Eskenazi said.
Recent wins in South Korea also helped BigBand gain some ground in one of its bread-and-butter categories: switched digital video (SDV). Bassan-Eskenazi said cable systems serving more than 24 million homes have deployed or are in the process of deploying BigBand's SDV platform. That's up from about 20 million BigBand reported at the end of 2008. (See BigBand Rocks in Q4, But Cuts Jobs .)
In the quarter, LG Powercom Co Ltd. of South Korea became BigBand's first-ever international 10 percent customer. (See Koreans Take Cable IPTV for a Spin .) Others in the 10 percent-plus category included Bright House Networks and Time Warner Cable Inc. (NYSE: TWC), with the latter accounting for 40 percent of BigBand's revenues.
Verizon Communications Inc. (NYSE: VZ), a telco that's historically been on that list, as well, fell off in the first quarter, but not by much. "We believe it's a temporary situation," Bassan-Eskenazi said, noting that BigBand remains Verizon's exclusive provider of video edge technology.
More broadly, "we saw some slower spending by the telco operators [in Q1]... which we expect to persist in the short-term," he added.
— Jeff Baumgartner, Site Editor, Cable Digital News